Effects of Assets Leases on Financial Statements and Ratios

Introduction A lease is a contract between a lessor or owner of an asset, and a lessee, who is seeking to use the asset. In exchange for the right to the use of the assets, the lessee makes periodic lease…

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Financial Reporting of Investment Property

Introduction IFRS defines investment property as property that is owned (or, in some cases, leased under a finance lease) for the purpose of earning rentals or capital appreciation or both. Cost Model and Fair Value Model IFRS allows companies to…

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Property, Plant, and Equipment and Intangible Assets

Introduction Analysts can use disclosures to better understand a company’s investments in tangible and intangible assets, how those investments changed during a reporting period, how those changes affected current financial performance, and what those changes might indicate about future performance….

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Derecognition of Property, Plant, and Equipment and Intangible Assets

Introduction Derecognition of an asset occurs whenever an asset is disposed of or is not expected to provide any future benefits from either its use or disposal. As a result, the asset is removed from the financial statements. Disposal of…

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Describe the Revaluation Model

Introduction The revaluation model is an alternative to the cost model and is used for the periodic valuation and reporting of long-lived assets. Whereas IFRS permits the use of either the revaluation model or the cost model, the revaluation model…

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Choice of Amortisation Method and Assumptions

Introduction Amortization expense, financial statements and the ratios derived from them may be significantly impacted by a company’s selected amortization method and accompanying assumptions and estimates. The Effect of the Choice of Amortisation Method and Assumptions on Amortisation Expense, Financial…

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Choice of Depreciation Method and Assumptions

Introduction Financial statements and the ratios derived from them may be significantly impacted by a company’s selected depreciation method and accompanying assumptions and estimates. Companies should review the estimates used on a periodic basis to ensure that they remain reasonable….

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Different Depreciation Methods for Property, Plant, and Equipment

Introduction Depreciation refers to the process of allocating the cost of a tangible asset over its useful life. Based on the cost model of reporting long-lived assets, the capitalized costs of long-lived tangible assets, other than land, are allocated to…

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Calculate and Interpret Segment Ratios

Introduction In order to gain a detailed understanding of a company, it is necessary to evaluate the performance of its individual business segments i.e. its subsidiaries, operating units, and operations in different geographic areas. This evaluation is facilitated by the…

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Ratios Used in Equity Analysis and Credit Analysis

Introduction Equity analysis involves the evaluation of a company’s equity in order to determine its relative attractiveness as an investment. A number of methods can be used in this evaluation, including valuation ratios, discounted cash flow approaches, and residual income…

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